Industry groups weigh in on “grandfathered” status as comment period ends

Julian Pecquet 08/17/10

Federal regulators received a slew of requests for changes to their proposed “grandfathering” rules before the comment period ended at midnight on Monday.

The provision is important because it exempts healthcare plans from certain costly requirements of the healthcare reform law, including cost-sharing restrictions and new minimum benefit standards. While healthcare providers in general have been pressing for tight restrictions — they stand to benefit from the more generous coverage provided under the new law — insurers and business groups argue that flexibility will prevent people from losing their coverage.

In comments filed Monday, America’s Health Insurance Plans (AHIP) suggests that regulators align allowable cost-sharing changes with rising medical costs and allow changes to prescription drug formularies and provider networks, among other changes.

AHIP has asked its members to lobby lawmakers on the issue throughout the August recess, The Hill reported last week.

Others want tougher standards.

The American Chiropractic Association last week weighed in with the belief that “every effort should be made to increase the number of individuals covered by” the new law. 

“The health care system in this country has already proven what occurs when separate and individual risk pools exist throughout a population,” the group told regulators. “When separate arrangements are maintained over time, costs shift, consumers and administrators become even more confused, and the cost of managing and maintaining these separate arrangements are added to the health care system costs overall (including the consulting fees that may be required to make business decisions).”

To limit the scope of the provision, the chiropractors’ professional society suggests that health plans lose their grandfathered status in case of:

• A “substantial change” to the provider network, including “any change in the provider network impacting over 50 percent of the employee population (nationally or locally)”;

• A change in issuer or third-party administrator, including moving from fully-insured to self-funded;

• A change in drug formulary or pharmacy benefit manager administrator; 

• Or a significant change in care management and authorization requirements.

Meanwhile, the National Community Pharmacists Association is asking regulators to strip healthcare plans of their grandfathered status if they “mandate or incentivize” beneficiaries to use mail-order pharmacies. On the other hand, the pharmacists’ lobby wants healthcare plans to be able to retain their status if they change their drug formularies to promote the use of generic drugs.

The requested changes, the pharmacists’ lobby said in comments filed Friday, “serve the legislative and regulatory goals of allowing flexibility to decrease beneficiary drug costs and increase beneficiary drug access, while remaining true to the concept that beneficiaries should be allowed to keep their existing coverage if they so choose.”

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